Wkly Futures Mkt Summary May 28.24


While the declines in treasury prices last week were measured, both fundamental and technical signals suggest more declines this week. In fact, the US PMI and durable goods reports rekindled confidence in the US economy and added to bearish Federal Reserve dialogue from the Atlanta Fed conference early in the week. While the treasury markets saw comments from the Fed’s Bowman suggesting she preferred waiting to begin tapering the Fed balance or smaller balance sheet runoffs, the Fed’s Kashkari remained definitively hawkish by suggesting the Fed needs “significant progress on inflation” before cutting rates.


In retrospect, the upward march in the US dollar last week was initially suspicious, but data at the end of the week improved with PMI and durable goods readings surprising on the upside. However, an avalanche of US Federal Reserve dialogue last week favored the hawkish side of the equation thereby giving fundamental credence to the rally. Despite the latest flurry of less dovish US Federal Reserve dialogue the dollar has broken out to a six-day low early this week

Weakness in the US dollar from an ongoing bearish dollar chart set up has allowed the euro to win by default. Furthermore, the euro is strong despite very disappointing German IFO business climate, current assessment, and expectations survey readings for May, but supported by residual strength in German wholesale prices for April. The upside breakout in the Pound this week is justified by the lack of competition from US dollar interest and from a rebound in UK BRC shop price index reading for May.


Despite what in retrospect appears to have been a “buy the rumor, sell the fact” reaction to Nvidia earnings, we think the bull camp retained control late last week. In our opinion, the primary justification for bullish control is the undying and very strong optimism toward future big tech, chip sector, and AI opportunities. In fact, with a 10 to 1 stock split of Nvidia share prices, that stock is likely to receive more small investor interest and goes without saying that AI is expected to be the biggest opportunity since the beginning of the big tech era.

The S&P has regained 75% of last week’s washout and should receive support from news that last month’s Apple iPhone sales in China jumped by more than 50% versus year ago data. Fortunately for the bull camp, the recent jump in the net spec and fund long to the highest level since February 2022 was pulled down with the slide after the COT report was measured. Unlike the S&P, Dow futures remain on the ropes trading just above last week’s attempt to build a consolidation low pattern above 39,095. Not surprisingly, the NASDAQ charts are the most bullish with all-time highs just above the early high of this week.


While gold and silver are tracking higher early this week, the charts still favor the bear camp from last week’s sharp range down failures which in turn should make the Thursday/Friday lows key pivot point pricing to start the new trading week. Adding into the negative track in gold and silver prices early this week is news that Chinese April net gold imports plunged 38% from March which we think was largely the result of historically high pricing.


While the net spec and fund long position in copper has come down considerably from the COT report mark off date, the net spec and fund long was at the highest level since early 2021! However, from the positioning report into the recent low July copper prices fell by $0.34, thereby balancing the overbought condition modestly. The Commitments of Traders report for the week ending May 21st showed Copper Managed Money traders are net long 75,342 contracts after net buying 2,557 contracts. Non-Commercial & non-reportable traders are net long 77,867 contracts after net buying 8,431 contracts.


While we are suspicious of the strength in petroleum prices early this week off the idea that OPEC plus will extend their production restraint program in next week’s meeting, it is possible that a thin measure of stop loss buying/short profit-taking buying is combining with a weaker dollar to lift petroleum prices. In negative news, the Saudis are reportedly poised to cut July oil prices to Asia for the first time since the beginning of the year, but intense fighting in Gaza is probably minimal behind-the-scenes support. Another supportive development is the sharp 31% drop in Mexican oil exports last month. However, bullish sentiment toward Brent crude oil continues to drain and the official holiday weekend kickoff to the North American summer driving season has passed.

                                                >>VIEW FULL REPORT PDF HERE<<


Soybean prices started higher this week before running into some selling, but the streak of steady to higher daily lows continues for the 9th consecutive trading session as is keeping the bull camp in control. Planting progress will be out Monday afternoon and is expected around 70% complete. The Western bean belt saw only scattered rains of the last 4 days with heavier rains over the weekend in eastern Iowa, Wisconsin, Indiana, western Kentucky and Tennessee.


Spillover strength from wheat is giving a boost to corn to start the week before planting progress is released late Monday, which is expected to be around 85% done. The 1st crop condition report for the season is expected next week and the rating is anticipated to be high. Over the holiday weekend, heavy rains hit eastern Iowa, Wisconsin, Indiana and the southeast corn belt and above normal precipitation is expected in the 6 to 10 day timeframe for the southern and eastern corn belt with temperatures also above normal. Drier conditions are expected in the Western corn belt, except for the southern Plains. Cool temperatures in Argentina are helping slow the leafhopper outbreak AgRural updated their Brazil total corn production estimate to 118.84 million tonnes, compared to USDA at 122 million.


Wheat prices jumped higher to start the week on further cuts to the Russian crop as IKAR cut Russian production 2 million tonnes to 81.5 million and SovEcon reduced their estimate to 82.1 million tonnes, down from 85.7 million. USDA has Russian production at 88 million tonnes. In addition, the Ukraine grain union lowered Ukraine’s wheat production 2.9 million tonnes to 19.1 million tonnes, compared to USDA at 21 million. Up to half of Black Sea wheat areas will remain under stress over the next 2 weeks. The recent weather rally has wheat prices up 35% since March with Paris milling wheat hitting a one-year high yesterday.


July hogs fell below the 0.618 retracement of the rally from the contract low to the contract high last week, as well as below the 200-day moving average for the first time since January. This was bearish technical action, but traders may be reluctant to press the market too much lower after it has fallen steadily for four straight weeks. Friday’s Commitments of Traders report showed managed money traders were net sellers of 12,631 contracts for the week ending May 21, reducing their net long to 43,497. This was down from a peak of 92,731 on April 9 and the lowest it had been since February 13.


The Cattle on Feed report on Friday afternoon neutral, with placements, marketings, and on-feed numbers all very close to expectations, but live cattle we may see a lower open this week after the rally last week, especially now that the Memorial Day holiday has come and gone. New bird flu concerns may emerge as well, as USDA said on Friday that virus particles were found in tissue samples taken from one dairy cow sent to slaughter at a US meat processing plant. Meat from that animal and others also tested were prevented from entering the nation’s food supply. Cash live cattle ended last week about $2/cwt higher than the previous week. As of Friday afternoon, the five-day, five-area weighted average cattle price was $190.24, up from $188.31 the previous week.


Cocoa’s 4-day winning streak has lifted prices well clear of last Monday’s 2-month low. With the market seeing a bullish shift in the near-term supply outlook, cocoa prices can maintain upside momentum through the end of this month. July cocoa was able to rebound from early pressure as it reached a 1 1/2 week high before finishing Friday’s trading session with a sizable gain. For the week, July cocoa finished with a gain of 946 points (up 12.9%) and a positive weekly reversal. A recovery move in the Euro and the British Pound provided a boost to cocoa prices as that can help European grinders with acquiring near-term cocoa supplies. West African near-term supply remains tight, and that has also strengthened cocoa prices late last week.


Coffee prices were able to consolidate after last Tuesday’s sharp rally and will start this week’s trading on course for a positive monthly result. With the market seeing a bullish shift in the supply outlook, coffee prices can finish May on an upbeat note. July coffee was able to regain upside momentum following last Thursday’s reversal as it finished last Friday’s trading session with a moderate gain. For the week, July coffee finished with a gain of 11.65 cents (up 5.7%) and a third positive weekly result in a row. Stronger equity markets in the US and European should give a boost to restaurant and retail shop consumption which underpinned coffee prices late this week.


July cotton saw positive action last week on fund short covering and active buying of US cotton by China. Friday’s Commitments of Traders report showed managed money traders were net sellers of 8,058 contracts of cotton for the week ending May 21, increasing their net short to 23,372, their largest since March 2023. The record net short was 47,428 from August 2019. The rally since the data was collected has likely reduced the oversold status. The 28% decline in prices off the February high attracted global buyers and left the market without much weather premium at the start of the growing season.


Sugar prices broke out of their consolidation zone to the downside as they fell to a new 14-month low on May 16. Over the past six sessions, prices have held above that low and are in better position to sustain upside momentum over the next few weeks. July sugar rebounded from early pressure as it finished Friday’s trading with a moderate gain. For the week, July sugar finished with a gain of 0.28 cent (up 1.5%) which was the third positive weekly result over the past four weeks.

Please contact us at 1.877.690.7303 or via email at sales@admis.com for any questions or comments on this report or would like more information about ADMIS research. 

>>Explore more here


Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

Latest News & Market Commentary

Explore the latest edition of The Ghost in the Machine

Explore Now